DOW opens down sharply, President reconsiders tapping TARP funds
9:30 AM EST has come and gone and the Dow Jones Industrial Average has officially begun its trading day. As expected, the index dropped sharply after the opening bell, which was rung today by singer/actress Mandy Moore. Ms. Moore watched as before sound waves from the bell hit the other side of the room, the Dow had fallen from 8,565 points to 8,348, or about 217 points. At the moment it's back up above 8,400 points, but who knows where we'll go from there.
We've been watching cable news all morning, and it was revealed about 20 minutes before the Dow opened today that the White House was reconsidering its stance against tapping the Troubled Asset Relief Fund for troubled U.S. automakers. While we haven't heard anything official from the administration yet, pundits say it does have the power to redistribute some of the $700 billion earmarked for financial institutions to aid automakers. Before the Senate shot down an Auto Rescue/Bailout Bill last night, the White House had refused to consider tapping TARP to save General Motors and Chrysler from imminent bankruptcy. Now it seems all three automakers could file for Chapter 11 before Bush leaves office in January unless the administration acts quickly.
UPDATE: Of the $350 billion available in the first round of TARP fund distribution, $335 billion has already been handed out to financial institutions. That conveniently leaves about $15 billion, which is almost exactly the amount General Motors and Chrysler require to stave off immediate bankruptcy. Still no official word from the White House, other than that it's reconsidering the use of TARP money to aid automakers after the Senate's failure to pass a rescue/bailout bill last night.
[Source: AOL Money and Finance, MSNBC]
Reader Comments (Page 1 of 2)
Mazda FTW! 10:02AM (12/12/2008)
Don't take money from the TARP! Who else is gonna pay for the caviar bar at the AIG Insurance Saturday Night Boogie Party this weekend?
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SteveRB 11:44AM (12/12/2008)
Look, up in the sky ... is it a plane? No, it is President LameDuckBlockHead. He just realized the auto industry is important for our economy. As usual, our super hero being dragged into doing the right thing. Mission accomplished.
The Luigiian 11:54AM (12/12/2008)
"Look, up in the sky ... is it a plane? No, it is President LameDuckBlockHead. He just realized the auto industry is important for our economy. As usual, our super hero being dragged into doing the right thing. Mission accomplished."
You reminded me of the scene in Genesis' Land of Confusion music video that showed Reagan as Superman. He ended up falling asleep in front of the TV before he could actually get the job done and stop the bad guys.
Check it out: http://www.youtube.com/watch?v=yt6R6sTwsa4 It's at around 2:26. (Annotations aren't working for me.)
At this point, I suppose they could update it by having Bush try to save the "damsels in distress" Wagoner, Nardelli and Mulally, but he gets bored and winds up Commissioner of Baseball.
ronnie schreiber 2:19PM (12/12/2008)
Reagan was such a dunce that he only started 25 years of prosperity and won the Cold War.
But, hey, if you want to get your political analysis from musicians, go right ahead.
Like Frank Zappa said, listening to musicians about politics makes as much sense as listening to politicians make music.
The Luigiian 8:25PM (12/12/2008)
Schreiber, who said I agreed with the video? I just said SteveRB's comment reminded me of it.
Nightcrawler 10:07AM (12/12/2008)
The Dow is only down less than 100 as I type this, which is just another day on Wall Street. I take that to mean the market feels the Bush administration will indeed fund the bailout from the Troubled Asset Relief Fund.
I still can't understand why the Wall Street bailout was necessary to protect the economy while the relative pocket change to keep the automakers alive is beyond the pale to Congress. Yeah, you can justify it by saying the Republicans are fighting the unions, but surely they realize this issue has much bigger implications that whether they can take the UAW down a peg or two.
Or maybe they were just smart enough to know Bush would fund it anyway through the $700B already authorized, so there was no need to take even more taxpayer money for a separate bill.
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mayflyripper 10:16AM (12/12/2008)
Are we positive that the sharp drop in the index is due to the rejection of the automotive bailout bill and just the index's reaction to having Many Moore ring the opening bell?
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Chase 10:19AM (12/12/2008)
Go in to Chapter 11 immediately anyway GM. Cut ties with the UAW. The union being a union isn't a problem. Its particularly the UAW's inability to be reasonable which is.
Not accepting a pay cut when the industry is on the verge of liquidation is like sinking all the life rafts just because you think you got the smallest one.
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dkw 10:33AM (12/12/2008)
I believe what the UAW said was that they would agree to pay cuts, IF the other parties that had a stake in the company would also agree to concessions.
I believe that to be fair. Why not come to the table where everyone pitches in for the company, instead of just asking one group, be it the line workers, or the CEO salaries, or what have you.
Chase 10:49AM (12/12/2008)
My point is that the Senate didn't think that was fair, and that was ultimately the body who's opinion mattered. I honestly have no idea if it was or if it wasn't. All I know is that the money is not going into anyone's pockets. Something is better than nothing.
Travis 10:51AM (12/12/2008)
but then they'd lose their nice management perks like stock options, corporate jets, vacations, and multi-million-dollar-salaries. management would get F'd as much as the UAW would, which is why they're desperately trying to avoid it. want to take a bet as to how much stock and stock-options the upper management have that they would lose if they filed chapter 11? $244million. And that's at the crappy low current price. They've already lost billions.
Steve_S 10:21AM (12/12/2008)
So can I get some TARP money because I refuse to pay for my mortgage? As Cerberus is doing with Chrysler? I can see giving GM a bridge loan so that they haven have a structured bankruptcy in a few months but why in the hell is Chrysler getting anything. Our money could be used on a better energy infrastructure, roads, healthcare, anything else actually.
Does anyone think it’s crazy that Chrysler will get tax payer money because their parent company refuses to give them money?
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MemphisNET 10:51AM (12/12/2008)
Chrysler going under would cause a ripple effect that would send GM over the edge, and put Ford into a Chrysler-like position. It would also directly hit any other manufacturer doing business with Chrysler suppliers. Take that much volume out of a supplier, and it won't matter that x-company makes a better car. If their supplier shuts their doors, it sends everything into chaos.
I wish Chrysler could just become independent.... Cerberus is turning out to be just as dangerous to Chrysler as Daimler was.
Hamud 10:30AM (12/12/2008)
Ohh GOD, today is gonna be one hell of a day.
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Rick 10:39AM (12/12/2008)
Yes, when it was announced last night the bill had failed, the then still open Nikkei dropped 6% instantly. Yes, global financial armeggedon.
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jpb3 10:41AM (12/12/2008)
Unfortunately FORD is being dragged through the mud with GM and Chrysler on this. Notice how it states in the article that all 3 may file for bankruptcy before Bush leaves office? Ford has already stated it has enough cash on hand to survive through 2010 and does not want a government loan, only a line a credit to access when/if the other 2 automakers go chapter 11 as that will severely effect their suppliers.
Ford began to see the light long before GM and Chrysler, and positioned themselves much better in the last couple of years. They are not without guilt or fault for the current crises, but they are also not nearly as bad off as GM and Chrysler.
One other thing. How is it not a complete slap in the face to industry and blue collar workers? The extent of hypocrisy shown by providing $700 billion to Wall street investment banks and insurance companies yet not even willing to come to some agreement for the US auto industry is insane. I mean, we the taxpayers are giving the banks and insurance companies all the money (and then some) they want without hardly any oversight or accountability, and they are the ones who contributed the most to the current recession we are now in! Yet our legislators draw a line in the sand with an industry that actually produces a tangible commodity and employs 3 million taxpayers!
We as a nation hardly produce anything anymore, except badly engineered exotic financial products and a more entry level service sector jobs :(
Lets continue to provide a parachute to white collar industry while we bend over the hourly worker......it is the American Way after all.
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david 11:51AM (12/12/2008)
Well said.
I agree that it's a slap in the face to the blue collar workers that the gov can bail out the banks, but not the big 3.
However, my view is that no one should have been bailed out at all. Yeah, I know things would be bad, but I guess I was just raised a different way. You know, where you learn it's OK to fail because you learn from it and become stronger from it. Call me close minded, or what have you, but keeping someone from failing does not help them, it hurts them. That pain of failing is a scary one, but too many people think that life should have no pain. Guess what, it does, and always will have pain, but you'll still get up the next day, and you'll still be able to get through it, you just have to buckle down and get through it.
This all boils down to greed, and everyone is just as guilty as the next person. From the government to the CEO's to the workers, everyone spent more money then they had.
Dude 10:52AM (12/12/2008)
My thoughts exactly.
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Brn 10:54AM (12/12/2008)
Anyone else think the idiots on Wall Street are the real problem?
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jamie 11:13AM (12/12/2008)
Nope.
Wall Street is not the problem. That's just legalized gambling gone awry due to poor government oversight.
Big banks aren't the problem either. That's just another form of legalized gambling gone awry due to poor government oversight.
The auto companies aren't to blame for the current economic mess. It's poor government policies that caused the problem in the first place.
Getting the message yet?
The government established the rules by which everyone plays by. But the rules are inadequate to say the least.
Ergo, the government is the problem. The government must change.
But it hasn't.